Value processing network and methods

ABSTRACT

Various arrangements for processing a transaction involving at least two parties are provided. Rules may be established that define transaction processing between combinations of a plurality of origination entities and a plurality of destination entities. Transaction information may be received relating to the transaction between the two parties. One of the parties is an origination entity and one of the parties is a destination entity. The transaction information contains at least an identifier from which at least one of the parties may be identified. The transaction information may be used to identify at least one of the parties. The rules may be used to define transaction processing for the at least one party. Processing of the transaction may be at least partially based on the rules.

CROSS-REFERENCES TO RELATED APPLICATIONS

This application is a continuation of U.S. patent application Ser. No.10/460,741, filed Jun. 11, 2003, entitled “VALUE PROCESSING NETWORK ANDMETHODS,” which claims the benefit of U.S. Provisional PatentApplication No. 60/388,047 entitled “CLOSED LOOP FINANCIAL PROCESSINGSYSTEMS AND METHODS,” filed on Jun. 11, 2002, the entire disclosures ofwhich are herein incorporated by reference for all purposes.

BACKGROUND OF THE INVENTION

This invention relates generally to the field of computing systems andmethods for using them. More specifically, the invention relates tocomputing systems programmed to process value transactions through oneor more processing networks in a selectable manner.

A merchant who accepts electronic forms of payment in exchange for goodsor services generally has an agreement with a bank, or other entity, forprocessing transactions.

As part of the agreement, the merchant maintains an account at the bankfor deposit and withdrawal of funds associated with the merchant'selectronic payment transactions.

Account identifiers, in the form of a card or other token such as apaper check or RF fob, are issued to accountholders by a variety ofaccount issuers, including banks, retailers, or other financial serviceproviders. In the case of “interchange” accounts, e.g., VISA® orMASTERCARD® card products, ACH, or bank issued debit cards, there is athird party brand owner (card association or debit network or FederalReserve) that acts as an intermediary between the merchant's bank andthe account issuer to complete the transaction. (Rather than issuingaccounts and account identifier tokens itself, a brand owner generallylicenses other entities to issue accounts under its brand name.) Thisintermediary not only licenses its brand and sets rules for use of theaccount, but operates a computer processing system, generally called abranded network, which routes and settles its own brand of transactions.In the case of “private label” credit cards, e.g., credit cards issuedby a retailer, there is generally no intermediary; hence, such cards aregenerally accepted only by the issuing entity (or in some cases itssubsidiaries).

A typical electronic payment sales transaction begins when anaccountholder presents an account identifier token to purchase goods orservices from a merchant. The merchant transmits an authorizationrequest to its bank. In the case of interchange accounts, the merchant'sbank typically does not have direct access to information regardingaccount status, so the merchant's bank forwards the request to theappropriate network for authorization.

If the transaction is authorized, an authorization code is returned tothe merchant. The merchant completes the sales transaction by deliveringthe goods or services and obtaining in exchange a ticket representingthe cardholder's agreement to pay the card issuer. The ticket istypically a piece of paper (usually signed by the cardholder) or anelectronic equivalent. The ticket provides sufficient information toidentify the accountholder, the account identifier token used, themerchant, and the amount of the sales transaction.

Next, the merchant collects payment for the sales transaction bypresenting the ticket to his bank. Typically, the merchant accumulatestickets from a number of sales transactions (e.g., all transactions fromone day) and presents a batch of tickets together to the bank. Themerchant's bank buys the ticket and deposits funds into the merchant'saccount. In general, the amount of funds deposited into the merchant'saccount is less than the amount of the sales transaction by a percentage(the “discount rate”) established between the merchant and his bank. Themerchant's bank may also maintain a reserve against the merchant accountby temporarily withholding part of the funds in order to cover the riskthat the bank is not subsequently repaid by an account issuer for any ofthe merchant's transactions. Funds held in reserve are usually releasedto the merchant account after some period of time.

The merchant's bank presents the ticket to the account issuer forsettlement. Settlement requests may be processed in batches and areusually routed through a branded network rather than being sent directlyto the account issuer. The account issuer transfers funds to themerchant's bank in exchange for the ticket. The amount of fundstransferred is, in general, less than the amount of the salestransaction because the account issuer deducts an “interchange fee”reflecting the delay between the account issuer's payment of funds tothe merchant and the accountholder's payment to the issuer, as well asmerchant fraud losses and costs associated with use of a brand'sinterchange services. At some point after settlement, the account issuerbills the accountholder for the full amount of the transaction, ordeducts the amount from the accountholder's account.

In a transaction where a retail or non-branded account is used, theprocessing is similar, except that the merchant's bank and the accountissuer are generally the same entity. Thus, the account issuer directlyauthorizes the transaction, and a settlement between the issuer and themerchant's bank is not required. As is generally known, acquisition andsettlement processing may have many other variations, depending on theproduct used and the terms of settlement agreements adopted by variousaccount issuers and associations (e.g., some associations settledirectly with the merchant and do not transfer funds via anintermediary).

Merchant banks are thus confronted with considerable complexity inmanaging payment processing operations, particularly when the bankprovides processing services for a large number of merchants who accepta variety of payment types of different brands and/or issuers.Transactions must be received and routed, and accounting of debits andcredits of funds during acquisition and settlement must be maintained.Information for each merchant must be kept up-to-date. Periodic accountstatements and other activity reports must be generated and sent to eachmerchant. Further, a merchant's bank may outsource some or all of itspayment processing operations to a third-party provider of processingservices. These third-party providers confront an added level ofcomplexity because of the need to manage data and transactions formultiple banks.

Electronic payment processing rules, and the business relationshipswhich the rules represent, are defined by the payment type and networkover which the payment processing flows, rather than by the partiesinvolved in the transaction. Thus, it is not possible for merchants andaccount issuers to easily define and implement new sets of rulesrepresenting individual business relationships.

Many types of electronic value exchange transactions involve processingmethods having similar levels of complexity. For example, moneytransfers, discount certificate exchanges, loyalty point transactions,“pre-paid” commodity purchases, person-to-person barter, and the like,all involve some number of transaction steps. As a result, systems areneeded, along with methods for using such systems, that improve theprocessing of such transactions, can be expanded to process anever-increasing number of transaction types, and enable theestablishment of a variety of business relationships governing saidtransactions.

BRIEF SUMMARY OF THE INVENTION

Embodiments of the invention thus provide a method of processing atransaction involving at least two parties. The method includesestablishing rules that define transaction processing betweencombinations of a plurality of origination entities and a plurality ofdestination entities and storing the rules at a storage arrangementassociated with a host computer system. The method also includesreceiving at the host computer system transaction information relatingto the transaction between the two parties. One of the parties is aparticular one of the origination entities and one of the parties is aparticular one of the destination entities. The transaction informationcontains at least an identifier from which at least one of the partiesmay be identified. The method also includes using the transactioninformation at the host computer system to identify at least one of theparties and consulting the storage arrangement to determine the rulesthat define transaction processing for the at least one party. Themethod also includes processing the transaction based, at least in part,on the rules.

In some embodiments, the rules define routing of the transaction, feesassociated with the transaction, timing of settlement, method ofsettlement, aggregation and reporting, dispute resolution, compliance,fraud detection, and/or risk sharing. In some examples, the transactionmay relate to a credit card transaction, retail card transaction, debitcard transaction, account withdrawal, money transfer, gift card,negotiable instrument, loyalty or reward points, pre-paid commodities,insurance benefits, cell-phone minutes, stored value card, discountcertificate or the like. Receiving transaction information may includereceiving an electronic message or transmission from a transactionprocessing device. The transaction processing device may be an automatedteller machine, a merchandise scanner, a point-of-sale device, a dataentry device, a Radio Frequency (RF) fob, a point-of-sale computer, amoney transfer device, a telephone, a PDA and/or the like. Processingthe transaction may include forwarding information representing at leasta portion of the transaction to a network or a destination processingsystem. The network may include the Automated Clearing House network,the Federal Reserve network, a branded network, a banking network, aninternational banking network, a money transfer network, a loyaltynetwork, a health care benefits network, a discount certificateclearinghouse, the Internet, and/or the like.

In other embodiments of the invention, a system for processing atransaction involving at least two parties includes a host computersystem and a storage arrangement. The storage arrangement may beconfigured to store rules that define transaction processing betweencombinations of a plurality of origination entities and a plurality ofsettlement entities. The host computer is programmed to receivetransaction information relating to the transaction between the twoparties. One of the parties is a particular one of the originationentities and one of the parties is a particular one of the destinationentities. The transaction information contains at least an identifierfrom which at least one of the parties may be identified. The hostcomputer system is further programmed to use the transaction informationto identify at least one of the parties and consult the storagearrangement to determine the rules that define transaction processingfor the at least one party. The host computer system is also programmedto cause the transaction to be processed based, at least in part, on therules.

In some embodiments of a system according to the invention the hostcomputer system is further programmed to receive an electronic messageor transmission from a transaction initiation device. The transactioninitiation device may be an automated teller machine, a merchandisescanner, a point-of-sale device, a point-of-sale computer, a data entrydevice, a Radio Frequency (RF) fob, a money transfer device, atelephone, a PDA, and/or the like. The host computer system also may beprogrammed to forward information representing at least a portion of thetransaction to a destination computer processing system. The destinationcomputer processing system may be the Automated Clearing House network,the Federal Reserve network, a branded network, a banking network, amoney transfer network, an international banking network, a loyaltynetwork, a health care benefits network, a discount certificateclearinghouse, the Internet, and/or the like.

In other embodiments of the invention, a network for processingtransactions, includes means for receiving transaction information froma transaction initiation device. The transaction information relates toa transaction involving at least two parties, an origination entity anda destination entity. The parties have a pre-established relationshipembodied in transaction processing rules. The transaction informationcomprises at least an identifier for determining at least one party tothe transaction. The network also includes means for determining therules relating to the transaction and means for processing, at least inpart, the transaction.

In still other embodiments, a method of processing a transactioninvolving two parties, an origination entity and a destination entity,having a pre-established relationship embodied in rules relating to therelationship includes receiving transaction information relating to thetransaction and identifying the origination entity and the destinationentity at least in part from the transaction information. The methodalso includes consulting the rules to determine how the transactionshould be processed and processing the transaction based at least inpart on the rules.

In such embodiments, the destination entity may be an issuing financialinstitution, money transfer service provider, telephone company,airline, loyalty or rewards provider, manufacturer, insurance company,retailer bank, and/or the like. The transaction may involve value, whichmay be represented by a bank card account number, credit card accountnumber, discount certificate, bank account number, debit card accountnumber, stored value account number, insurance coverage identifier,money transfer identifier, loyalty account identifier, telephone accountnumber, airline ticket PNR identifier, gift card identifier, and/or thelike. The value may be money, credits, loyalty points, minutes, miles,and insurance benefits. The method may include receiving additionalrules from a second destination entity and processing a secondtransaction according to the additional rules. The method also mayinclude identifying processing rules relating to the destination entity.Identifying processing rules may include consulting a table having rulesinformation relating to a plurality of destination entities. Processingthe transaction may include aggregating a plurality of transactionshaving a common destination entity and sending a request forreimbursement to the destination entity. Processing the transaction alsomay include aggregating a plurality of transactions having a commonorigination entity and sending a reimbursement to the originationentity.

In still other embodiments, a system for processing a value transactionbetween an origination entity and a destination entity includes an inputtransaction handler that determines a transaction type and accesses anappropriate format and data and transaction validation according to aruleset obtained from a rules service based on the origination entity.The system also includes a routing service that identifies thedestination entity using rules for the particular transaction type and afee calculation service that determines a fee to apply and anycalculations to perform based on rules identified by a relationshipbetween the origination entity and the destination entity. The feeservice also performs the calculations and attaches fee information tothe transaction. The system also includes an output transaction handlerthat formats, validates, and sends the transaction based on rulesdetermined by the identity of the destination entity. The system mayinclude a transaction aggregation service that uses rules to determinehow the origination entity and the destination entity requiretransaction information to be combined for their businesses. This mayinclude both transaction grouping and transaction summarization. Thesystem also may include a reconciliation service that uses informationfrom the transaction aggregation service to balance multipletransactions according to rules for the transaction types. The systemalso may include a funds movement service that generates instructionsbased upon the rules defined by origination and destination entities foran actual value-exchange represented by a particular group oftransactions.

BRIEF DESCRIPTION OF THE DRAWINGS

A further understanding of the nature and advantages of the presentinvention may be realized by reference to the remaining portions of thespecification and the drawings wherein like reference numerals are usedthroughout the several drawings to refer to similar components. Further,various components of the same type may be distinguished by followingthe reference label by a dash and a second label that distinguishesamong the similar components. If only the first reference label is usedin the specification, the description is applicable to any one of thesimilar components having the same first reference label irrespective ofthe second reference label.

FIG. 1 illustrates a system according to embodiments of the invention.

FIG. 2A illustrates a method according to embodiments of the invention,which method may be implemented in the system of FIG. 1.

FIG. 2B illustrates one example of how transactions are processedaccording to embodiments of the present invention.

FIG. 3 illustrates a specific example of an embodiment of the presentinvention.

DETAILED DESCRIPTION OF THE INVENTION

The invention provides for the processing of value transactions throughone or more processing networks in a selectable manner with processingrules determined by the parties involved in the transaction. Herein“value” will be understood to mean any commodity that may be expressedin units. For example, value may comprise money, credits, loyalty points(e.g., miles, as more fully described in co-pending, commonly assignedU.S. patent application Ser. No. 10/386,027, entitled, “SYSTEMS ANDMETHODS FOR REDEEMING REWARDS ASSOCIATED WITH ACCOUNTS” (Attorney DocketNo. 020375-022030) filed on Mar. 10, 2003, by Blagg, et al., whichapplication is entirely incorporated herein by reference), minutes(e.g., pre-paid cell phone minutes), discount certificates (e.g.,manufacturer's coupons as more fully described in co-pending, commonlyassigned U.S. patent application Ser. No. 10/268,040, entitled,“DISCOUNT-INSTRUMENT METHODS AND SYSTEMS” (Attorney Docket No.202375-033100) filed on Oct. 8, 2002, by McGee, et al., whichapplication is entirely incorporated herein by reference), and/or thelike. Although specific examples reference payments for goods orservices, value may flow in either direction between the transactionparties. Thus, value may appear to be negative to an individual party,as might be the case, for example, with respect to credit card refunds,or chargebacks. Many other examples are possible.

According to embodiments of the invention, a transaction is initiated inany of a wide variety of ways. In one example, the transaction is acredit card transaction wherein a customer purchases an item from amerchant. While this example is discussed in terms of credit cardtransactions, it will be appreciated that the invention may be used withother transactions as well. For example, the invention may be used withdirect deposit transactions, money transfer transactions, ACHtransactions, and the like. A credit card acquirer or issuer may havevarious options on how to route and process financial transactions. Forexample, certain accounts may be flagged so that they pass through acard association branded network while others do not. Further, fortransactions that do not utilize the card association network, suchtransactions may be transmitted to specific processing platforms. Thisprocess happens in an automated fashion so that authorization andsettlement may proceed in an efficient manner.

Initially, a transaction originates at a transaction initiator. This maybe from a point of sale device, through the Internet, from a moneytransfer system, or the like. The transaction utilizes some type ofaccount identifier, such as a credit card number, that identifies theaccount that is to be charged for the transaction. The accountidentifier, along with other information on the transaction (such as thepurchase amount) is transmitted to a processing system. In the case ofcredit card transactions, the processing system may be a processingplatform that accepts transactions from certain merchants. For example,a shoe store may agree to have its credit card transactions processed bythe processing system. Once the transaction is received, the accountidentifier, the originating merchant identifier, and the transactiontype are evaluated to determine how the transaction should be routed,cleared, and settled.

The processing system may include a routing table that includesinformation on how a transaction should be routed based on the analysisof the aforementioned identifiers. For example, an issuing bank maydecide that certain of its cards are to be processed through a cardassociation system, such as MASTER CARD®, while others of its cards areto proceed directly to an issuing organization processing system. Thisinformation may be provided to the processing system and included in therouting tables so that each time a transaction that is associated with acard of the issuer is received at the processing system, it may beautomatically routed to the correct processing system.

If the processing rules indicate the transaction should proceed to abranded network, the transaction is in turn routed to one of the issuingorganization processing systems as described above for authorization,clearing, and settlement. Otherwise, the transaction is routed directlyto one of the issuing organization processing systems for authorizationand settlement. This scenario permits authorization and settlement toproceed as rapidly as possible, and also may reduce transaction costs.

In some cases, the issuer and merchant may be the same entity or may usethe same processing system. In such cases, all processing may occurusing the same system. For example, if both the merchant and the issuerused the same processing system, processing may all occur using thatprocessing system. However, in many cases, the issuer and the acquirermay be set up to process using different systems or platforms. By usingthe routing table, an issuer may be able to receive transactions at theissuer's processing system directly from the merchant's processingsystem and vice versa.

Another significant advantage of some embodiments is that the issuer hasthe flexibility to indicate different portions of its account portfoliomay be directed to process using different routing mechanisms andnetworks. Additionally, the account issuer, in agreement with merchantbusiness partners may also apply other transaction processing rulesregarding discount or processing fees, settlement timeframes, and thelike. For example, an issuer may identify a group of accounts, such aspremier cardholders, that are to be processed by going directly from oneprocessing system to another processing system while all others mayproceed through the branded network. Further, the issuer and aparticular merchant may agree that no chargebacks other than for reasonsof merchant fraud will be allowed, and that for this consideration, themerchant will apply more stringent fraud detection methods. In returnthe issuer additionally agrees to reduce the interchange fee.

As another specific example, an issuer may decide to implement amarketing campaign to increase the usage of its cards. To do so, theissuer may contract with a merchant, where the merchant agrees that allpurchases using the issuer's card will be processed by going directlyfrom one particular processing system to another processing system. Aconsumer may then be provided with marketing material suggesting the useof the issuer's card at the merchant's store, perhaps to receive adiscount on a certain purchase. When the consumer makes the purchase,the transaction proceeds to the first processing system which routes thetransaction directly to the second processing system for authorizationbased on the routing table. If authorized, a reply is transmitted backto the merchant so that the sale may proceed. The transaction is thentransmitted directly to the second processing system for settlement. Inso doing, transaction processing fees may be reduced. As such, theagreement between the issuer and the merchant may provide the merchantwith reduced fees, thereby enabling the merchant to offer betterincentives to its customers.

The foregoing specific examples are provided for illustration purposesonly and are not to be considered limiting since many other examples ofthe present invention are possible, as will be understood by thosehaving skill in the art in light of this description.

Having described one example of an embodiment of the inventiongenerally, attention is directed to FIG. 1, which illustrates an exampleof a system 100 according to embodiments of the present invention. It isto be understood that the system 100 is exemplary and that those skilledin the art will realize other embodiments in light of the disclosureherein. The system 100 comprises a host computer system 102 and anetwork 104 through which the host computer system may communicate withone or more transaction initiation devices 106. The host computer system102 may comprise one or more computing devices 108, storage arrangements110, internal networks 112, display devices 114, input devices 116,output devices 118, and the like. In some embodiments, the host computersystem 102 is distributed throughout a large geographic area, includingboth terrestrial and extra-terrestrial locations, as would be the casefor embodiments that include, for example, satellite links. In otherembodiments, the host computer system 102 exists within a singlefacility. In still other embodiments, the host computer system 102comprises a single computing device.

Each computing device 108 may be a work station, a PC, a laptop, amainframe, a PDA, or the like, or any other type of computing device.Each storage arrangement 110 may be a server, a database, or the like,or any other type of storage arrangement, and may include magnetic,optical, solid state memory, and/or the like, or any other type ofstorage medium. The internal networks 112 may be wired or wireless, andmay include the Internet, a virtual private network, a local areanetwork, a wide area network, and/or the like. The display devices 114may be any type of device that allows for the display of information.Each input device 116 may be a keyboard, a mouse, a voice recognitiondevice, a key pad, and/or the like, or any other type of input device.Each output devices 118 may be a printer, a projector, and/or the like,or any other type of output device. Other components of the hostcomputer system 102 may include servers, routers, switches, and/or thelike.

The network 104 may comprise the Internet, or any other wired orwireless network, including those listed above with respect to theinternal network 112.

Each transaction initiation device 106 may comprise a point-of-sale(POS) device (as more fully described in co-pending, commonly assignedU.S. patent application Ser. No. 09/634,901, entitled, “POINT-OF-SALEPAYMENT TERMINAL” (Attorney Docket No. 020375-002410), filed on Aug. 9,2000 by Templeton, et al., which application is entirely incorporatedherein by reference), an automated teller machine (ATM), a multi-purposekiosk (as more fully described in co-pending, commonly assigned U.S.patent application Ser. No. 10/225,410, entitled, “MULTI-PURPOSE KIOSKAND METHODS” (Attorney Docket No. 202375-024800), Aug. 20, 2002, byBlair, et al., which application is entirely incorporated herein byreference), a computing device, a money transfer POS device, a cashregister, a checkout scanner, a customer service representation (CSR)computer, a cell phone, a PDA, and/or the like, or any other type oftransaction initiation device. The transaction initiation devices may belocated at merchant locations, call centers, money transfer locations,public gathering places such as shopping malls, post offices, parks,transportation centers, sporting arenas, and the like. Transactioninitiation devices 106 also may comprise devices carried by or worn byconsumers or other transaction initiators. Many other examples arepossible. For example, a POS device at a health insurance serviceprovider may comprise a credit card transaction terminal and a healthinsurance eligibility terminal.

The host computer system 102 may be configured to communicate with othernetworks 120, which may comprise, for example, banking networks (such asthe Automated Clearing House network, the Federal Reserve network,BACS®, Swift®, or the like), debit networks (such as the STAR® network,the NYCE® network, or the like), a branded card network (such as theVISA®, MasterCard®, Discover®, American Express®, or EuroPay® networks,or the like), a money transfer network (such as the WESTERN UNION®network or the like), health benefits exchange networks (such asProxyMed®, WebMD®, or the like), airline ticket exchanges (such asAIRINC® or the like), and/or the like.

Through the various networks, the host computer system 102 communicateswith origination entities 122 and destination entities 124. Originationentities 122 may comprise merchants, acquiring banks, individuals, giftcard or stored value card processors, health care providers, airlines,and the like. Destination entities 124 may comprise manufacturers,issuing banks, individuals, health care payers, employers, airlines,telephone companies, and the like. In some transactions, parties whichare usually destination entities 124 may be origination entities 122,and origination entities 122 may be destination entities 124.

Attention is directed to FIG. 2A, which illustrates one embodiment of amethod 200 according to the present invention. The method may beimplemented in the system 100 of FIG. 1 or other suitable system. It isto be understood that the method 200 is exemplary, and those skilled inthe art will realize alternative embodiments in light of the disclosureherein. Further, the steps described herein need not be traversed in theorder described. Further still, alternative methods may include more orfewer steps than that described herein, as will be recognized by thosehaving skill in the art.

The method begins at block 202 wherein transaction processing rules areestablished. The rules may relate to any aspect of processingtransactions. For example, the rules may relate to how transactions arerouted, what fees are charged and by whom, the schedule for processingtransactions, how the risk relating to transactions is assigned, howexceptions relating to transactions are processed, how fraud will bemonitored, and/or the like. The rules may be established such thatparticular rules apply to: all transactions processed between twoparticular parties, (i.e., an origination entity and a destinationentity), only certain transactions between parties, all transactionsinvolving a particular destination entity, select transactions involvinga particular destination entity, all transactions involving a particularorigination entity, select transactions involving a particulardestination entity, and/or the like. Other examples are possible.

Additionally, the rules may be imposed by either origination entities orsettlement entities or may arise from mutual agreements betweenparticular settlement and origination entities. In some examples, therules are established by the owner of the brand for a brandedtransaction or the operator of a network that embodies an example of thepresent invention.

The rules may take many forms. For example, the rules may be as simpleas routing tables configured in a computer-readable medium such assoftware or firmware. The rules may comprise software code thatspecifically implements each aspect of each rule. The rules may comprisecomplex logical statements such as might be used with a well knowndatabase management system. The rules may themselves be embodied in dataentered into a database management system. The rules may be implementedby specifically designed electrical circuitry that “hard-codes” therules. The rules may comprise any combination of the foregoing and/orthe like, as is apparent to those of skill in the art in light of thisdisclosure.

Once the rules are established at block 202, the rules are stored insome manner that will allow them to be recalled and used for processingtransactions. This occurs at block 204. The medium in which the rulesare stored may depend on the form the rules take. In a specific example,the rules comprise data that may be stored in a database using a wellknown database management program or a specially-designed databasemanagement program.

At block 206, transaction information is received from a transactioninitiation device. The transaction initiation device may comprise any ofthe aforementioned transaction initiation devices, or any device capableof capturing transaction information and forwarding it to the hostcomputer system.

Having received the transaction information at block 206, the hostcomputer system then uses the transaction information to identify theparties involved in the transaction (e.g., the origination entity andthe destination entity) at block 208.

At block 210, the host computer system uses the identity of theorigination entity and the destination entity to consult the rules todetermine how transactions between these two entities are to beprocessed. The transaction is then processed accordingly at block 212.

The events that take place in blocks 206, 208, 210, and 212 may takemany forms depending on the specific parties involved in the transactionand the type of transaction information received. The transactionprocessing information may comprise a wide variety of items. In aspecific example, the transaction information minimally comprises anidentifier from which the origination entity, the destination entity,and the value of the transaction may be determined. In one examplerelating to a branded credit card transaction, the transactioninformation comprises a credit card account number, a merchantidentification number, and a charge amount. In this example, the creditcard account number identifies the destination entity, which may be anissuing bank, the brand of the transaction, and the payment type (e.g.,debit, credit, etc.). The merchant identifier either directly orindirectly identifies the origination entity, which may be a merchant,the merchant's bank (e.g., an acquiring bank), or the like. The chargeamount identifies the amount that a customer charged in exchange forgoods or services from the merchant. In some embodiments, thetransaction may be a exception resolution (e.g., a chargeback) betweenthe same parties, in which case the merchant is crediting the customer.In such a case the destination and origination roles are reversed,although the same transaction information may be used to identify theparties.

Further to the aforementioned example, the host computer systemevaluates the credit card account number to identify the entity thatissued the credit card. In this example the entity is a member of abranded card association. In such cases, the card association networkmay have rules which determine what transactions may be settled outsidethe branded network. In this case, the processing rules established bythe brand can override the processing rules determined by the originatorand destination agreement. Many other examples are possible. In someembodiments, multiple transactions are consolidated, which greatlyimproves the efficiency with which transaction are settled.

Further still to this example, a process of settling a credit cardtransaction between a customer 250 and a merchant 252 is illustratedwith respect to FIG. 2B. In this example, the customer 250 uses a creditcard to purchase goods from the merchant 252. In doing so, the merchantrequests authorization by sending an electronic transmission (arrow 256)to the operator 254 of a system according to embodiments of the presentinvention. The operator 254 responds to the transmission by eitherauthorizing or rejecting the transaction (arrow 258), which may includeusing rules to identify the destination entity and forward theauthorization to the destination entity and receive authorization fromit (arrow 257). Assuming the transaction is authorized, the merchant andcustomer complete the transaction. If necessary, the merchant sendsadditional transaction information to the operator (arrow 260), toindicate that the transaction was not completed.

Continuing with this example, the operator 254 used the transactioninformation to identify the origination entity (or his designee, in thiscase, the merchant's bank 262) and the destination entity 264, in thiscase, the bank that issued the customer the credit card used in thetransaction. The operator 254 then consults the rules to determinewhether the origination entity and the destination entity have apre-arranged agreement embodied in rules. In this example, the creditcard was issued pursuant to a license from a branded network. However,the branded network allows settlement processing outside its network.Thus, the origination entity 262 and the destination entity 264 haveagreed to rules relating to the processing of their mutual transaction.The operator identifies these rules and processes the transactionaccordingly.

In doing so, the operator 254 sends funds to the origination entity 262(arrow 266) and requests reimbursement from the destination entity 264(arrow 268). The sending of funds to the origination entity and therequesting of funds from the destination entity may be combined withother transaction such that the netting of several transactions mayresult in positive or negative amounts. The origination entity thenmakes the funds available to the merchant (arrow 269), while thedestination entity reimburses the operator (arrow 270). Although notnecessarily included within the operation of this example of the presentinvention, the destination entity bills the customer (arrow 272) andreceives compensation from him (arrow 274). These functions, however,may be performed by the operator on behalf of the destination entity. Itis to be understood that this is but one example of how transactions maybe processed according to the present invention. Other examples arepossible.

In another example, the transaction information comprises a discountcertificate identifier and a merchant identifier. The discountcertificate identifier may represent, for example, a manufacturer'srebate coupon that a customer presents to a merchant in exchange for adiscount on goods or services. Such discount certificates typicallyinclude a UPC label that a merchant may scan contemporaneously withtotaling a customer's purchases. The destination entity (i.e., themanufacturer, in this example), may be identified from information readby the scanner from the UPC label. The same information may be used todetermine the value of the transaction (i.e., the amount of thediscount). This information, together with the merchant identifier thatmay either directly or indirectly identify the origination entity, maybe used to ultimately cause value to flow from the manufacturer to themerchant.

In such examples, the processor may combine multiple transactionsinvolving the same manufacturer. The processor then requestsreimbursement from the manufacturer for the value of the discountcertificates. The manufacturer then credits the merchant or themerchant's designee (e.g., the merchant's bank) for the amount of thecoupons submitted by the merchant. In some examples, the manufacturersimply reimburses the processor for the value of the coupons, and theprocessor sorts out what portion of the amount goes to any of aplurality of merchants. The processor may withhold a fee from thereimbursements and/or receive additional compensation from themanufacturer and merchant as compensation for processing the coupons. Inaddition to directing discount certificate transactions to theappropriate destination entity, the processor also may verify that thecertificates were actually used in conjunction with a purchase of theproduct represented by the coupon. Many other examples are possible.

In some cases with respect to the processing of discount certificates,the issuing entity (e.g., the manufacturer) is outside the processor'snetwork. In such cases, the processor may consolidate the discountcertificates and pass them to another network in exchange forreimbursement. Other examples are possible.

In yet another example, the transaction comprises a money transferidentifier. In this example, the sender of the money transfer depositsmoney with an operator (e.g. a merchant) of a money transfer location,or a money transfer service provider (e.g., Western Union of Englewood,Colo.), and designates a recipient of the funds. The recipient of themoney transfer receives money from an operator (e.g., a merchant) of amoney transfer location. The merchant, in this example, dispenses to therecipient funds previously-deposited by a sender. The money transferidentifier may be used to determine both the origination entity, thedestination entity, and the amount of the wire transfer. In such anexample, the origination entity may be a money transfer service provider(e.g., Western Union of Englewood, Colo.), the operator of the moneytransfer location where the sender deposited the funds, or the like. Thedestination entity is, for example, the merchant that dispensed thefunds to the recipient.

In such an example, the money transfer service provider receives themoney transfer request at the time the sender deposits the money withthe originating money transfer location. The request is housed in acomputer system. When the recipient of the money transfer requests thefunds from the destination money transfer location, the destinationlocation requests authorization from the money transfer service providerfor the disbursement. Upon authorization, the money is disbursed to therecipient. The money transfer service provider performs settlement withboth the origination and destination money transfer location byaggregating each individual location's deposit and disbursementtransactions for a period of time (e.g., a day) and performing a singlefunds movement for the aggregate amount. For an individual transaction,the funds movement for the deposit may precede the funds movement forthe disbursement. The settlement from the money transfer serviceprovider to the originating and destination location may be the facevalue of the money transfer transaction less a processing fee. Manyother examples are possible.

In yet another example, the transaction information may comprise aninsurance identifier. In this example, a patient may present a card,such as a health benefits card, to a healthcare provider. The card mayrepresent a pre-paid benefits account (e.g., a medical spending account)and/or insurance benefits. The provider may use the card topre-authorize treatment for the patient, determine the patient's levelof benefits and/or deductible, obtain payment from the patient'spre-paid benefits account, and/or charge the patient for any remainingbalance. Thus, depending on the specific purpose for which the card ispresented, the settlement entity may be one or more different entities.For amounts charged to a pre-paid benefits account, the destinationentity may be a benefits administrator. For amounts changed to thepatient, the destination entity may be an credit account issuing bank.In most such instances, the origination entity would be the health careprovider. The transaction amount may vary and may only be determinableafter consultation of the rules hereinafter. For example, the rules maydetermine what amount of the transaction amount is allocated to anissuing bank for settlement and what amount is allocated to a benefitsadministrator for settlement. This all may be determined by the healthinsurance provider of the patient.

In yet another example, the transaction information comprises a checkingaccount number, a deposit account identifier, and a transaction amount.In such cases, a merchant may deposit into his bank a check tendered bya customer. The bank prepares an electronic transaction having thetransaction information and sends the transaction information to thehost computer system. In this example, the deposit account identifiermay be used to identify the origination entity, the checking accountnumber and the routing number of the bank upon which the check is drawnmay be used to identify the destination entity.

In still another example, the transaction information may comprise anelectronic banking number, a host bank number, and a transaction amount.In this example, a customer uses, for example, an ATM card to withdrawfunds from an ATM machine of the host bank (i.e., not the customer'sbank). Thus, the host bank number identifies the origination entity andthe electronic banking number identifies the destination entity (i.e.,the bank that issued the ATM card to the customer).

In still another example, the transaction information comprises a sourceaccount, and target account, and an amount of the transaction. In thisexample, a customer uses a multi-purpose kiosk (as more fully describedin previously-incorporated U.S. patent application Ser. No. 10/225,410)to exchange airline miles for pre-paid mobile phone minutes. The sourceaccount identifies the origination entity as the administrator of thecustomer's airline loyalty point program and the target accountidentifies the customer's cellular phone service provider as thedestination entity. The transaction amount may be in miles; however, therules may determine the exchange rate between airline miles and cellularphone minutes, at least between these specific entities.

In yet another example, the transaction information comprises a giftcard (as more fully described in co-pending, commonly assigned U.S.patent application Ser. No. 10/010,068, entitled, “ELECTRONIC GIFTGREETING” (Attorney Docket No. 202375-000610) filed on Dec. 6, 2001, byKaras, et al., which application is entirely incorporated herein byreference) identification number, a merchant identification number, anda transaction amount. In this example, a customer, having received agift card purchased by a gift giver from a seller, presents the giftcard for payment. Thus, the destination entity may be identified as thegift card administrator, and the origination entity may be identified asthe merchant or the merchant's bank.

The foregoing examples are intended to highlight the diversity of thepresent invention and are in no way intended to limit it. Those skilledin the art will realize many additional applications for the teachingsherein.

Attention is now directed to FIG. 3, which illustrates a specificexample 300 of an embodiment of the invention. The example 300 of FIG. 3illustrates a basic architecture for value-exchange transactionprocessing. Transactions flow from an Origination Entity 302 to an InputTransaction Handler 304. The Input Transaction Handler 304 determinesthe transaction type and accesses the appropriate format and datavalidation according to a ruleset obtained from a Rules Service 306based on the Origination Entity 302. Data enrichment (additionalvalue-added data) may also occur in the Input Transaction Handler 304,depending on the applicable ruleset. The transaction is then passed to aRouting Service 308, where a Destination Entity 310 is identified usingrules for the particular transaction type. Again, data enrichment mayoccur within the Routing Service 308.

The Routing Service 308 sends transaction information to a FeeCalculation Service 312 and a Transaction Aggregation Service 314. TheFee Calculation Service 312 determines appropriate fee(s) to apply andany calculations to perform. These determinations are based on rulesidentified by the relationship between the Origination Entity 302, theDestination Entity 310, and the electronic transaction type. The FeeCalculation Service 312 also performs the calculations and attaches feeinformation to the transaction (This is a specific form of dataenrichment). The Transaction Aggregation Service 314 uses rules todetermine how the Origination Entity 302 and the Destination Entity 310require transaction value information to be combined for theirbusinesses. This combination encompasses both transaction grouping(which transaction types are grouped together) and transactionsummarization (how transactions are to be added together to providevarious levels of recapitulation).

The aggregated transaction information is used by a ReconciliationService 316 to balance the system according to rules for the transactiontype(s). Balancing assures that all transactions received are accountedfor at various steps in the processing, and that all transactions aresent to a destination. High level aggregation is used by a FundsMovement Service 318 to generate the desired instructions for the actualvalue-exchange represented by a particular group of transactions.

The Routing Service 308 also sends the transaction to an appropriateOutput Transaction Handler 320, based on the identity of the DestinationEntity 310. Additional data enrichment may occur in the OutputTransaction Handler 320 as well. The Output Transaction Handler 320formats, validates, and sends the transaction based on rules determinedby the identity of the Destination Entity 310.

Settlement information 322 is accesses by both the Origination Entity302 and the Destination Entity 310 via methods chosen by these entities.These methods include reports, data files and Internet presentation.

This example 300 of an embodiment of the invention includes at leastthree advantages that may be shared by other embodiments of theinvention. First, the network does not impose any rules of its own on atransaction, whether based on a brand or transaction type. The rules forprocessing a transaction are determined solely by the relationshipbetween the two entities involved in the transaction (i.e., the networkis brand-agnostic). Second, the network architecture is not restrictiveas to the types of transactions that can be processed, i.e., it does notimpose it own rules on the transaction. This network architecture allowsfor multiple transaction types to be processed simultaneously. It alsoprovides the ability to combine any or all payment types for a givenentity. Third, the architecture provides the ability to rapidly deployhighly-customized transaction processing and value-exchange based onrules established by the entities involved in the exchange.

Having described several embodiments, it will be recognized by those ofskill in the art that various modifications, alternative constructions,and equivalents may be used without departing from the spirit of theinvention. Additionally, a number of well known processes and elementshave not been described in order to avoid unnecessarily obscuring thepresent invention. For example, those skilled in the art know how toarrange computers into a network and enable communication among thecomputers. Accordingly, the above description should not be taken aslimiting the scope of the invention, which is defined in the followingclaims.

1. (canceled)
 2. A method for processing a transaction, the method comprising: storing, by a computer system, a rule that defines transaction processing between an origination entity and a destination entity, wherein: the rule permits transaction settlement outside of a card association network, and the card association network is used to settle financial transactions; receiving, by the computer system, transaction information corresponding to the transaction, wherein: the transaction is between the origination entity and the destination entity; the transaction comprises a financial transaction involving a financial account linked with an account identifier; and the transaction information comprises the account identifier, which is associated with the destination entity; using, by the computer system, the transaction information to identify the destination entity; accessing, by the computer system, the rule that defines transaction processing between the origination entity and the destination entity; and processing, by the computer system, the transaction using the rule, such that the card association network is not used for settlement of the transaction.
 3. The method for processing the transaction of claim 2, wherein: storing, by the computer system, the rule that defines transaction processing between the origination entity and the destination entity comprises storing a plurality of rules, wherein the plurality of rules defines transaction processing between a plurality of origination entities and a plurality of destination entities.
 4. The method for processing the transaction of claim 2, further comprising: accessing, by the computer system, a second rule that identifies types of transactions that are permitted to be settled outside of the card association network; and overriding, by the computer system, processing of the transaction outside of the card association network at least partially based on the second rule.
 5. The method for processing the transaction of claim 2, wherein the rule defines transaction processing between a plurality of origination entities and the destination entity, wherein the plurality of origination entities comprises the origination entity.
 6. The method for processing the transaction of claim 2, wherein the origination entity processes purchase transactions, including the transaction, on behalf of a merchant.
 7. The method for processing the transaction of claim 2, wherein the rule that defines transaction processing between the origination entity and the destination entity is directed to particular types of transaction cards issued by the destination entity.
 8. The method for processing the transaction of claim 2, wherein the rule defines one or more of: routing of the transaction, fees associated with the transaction, timing of settlement, method of settlement, aggregation and reporting, dispute resolution, compliance, fraud detection, and risk sharing.
 9. The method for processing the transaction of claim 2, wherein the transaction is a type of transaction selected from the group consisting of: a credit card transaction, and a debit card transaction.
 10. The method for processing the transaction of claim 2, wherein the transaction is a type of transaction selected from the group consisting of: a gift card transaction, a retail card transaction, and a stored value card transaction.
 11. The method for processing the transaction of claim 2, wherein the transaction is a type of transaction selected from the group consisting of: an account withdrawal, a money transfer, a negotiable instrument transaction, a loyalty point transaction a reward point transaction, a pre-paid commodities transaction, an insurance benefits transaction, a cell-phone minutes transaction, and a discount certificate transaction.
 12. A system for processing a transaction, the system comprising: a processor; and a memory communicatively coupled with and readable by the processor and having stored therein processor-readable instructions which, when executed by the processor, cause the processor to: cause a rule that defines transaction processing between an origination entity and a destination entity to be stored, wherein: the rule permits transaction settlement outside of a card association network, and the card association network is used to settle financial transactions; receive transaction information relating to the transaction, wherein: the transaction is between the origination entity and the destination entity; the transaction comprises a financial transaction involving a financial account corresponding to an account identifier, and the transaction information comprises the account identifier, which is associated with the destination entity; use the transaction information to identify the destination entity; access the rule that defines transaction processing between the origination entity and the destination entity; and process the transaction using the rule, such that the card association network is not used for settlement of the transaction.
 13. The system for processing the transaction of claim 12, wherein the processor-readable instructions, which when executed by the processor, cause the processor to cause the rule that defines transaction processing between the origination entity and the destination entity to be stored comprises storing a plurality of rules, wherein the plurality of rules defines transaction processing between a plurality of origination entities and a plurality of destination entities.
 14. The system for processing the transaction of claim 12, wherein the processor-readable instructions are configured to cause the processor to: access a second rule that identifies types of transactions that are permitted to be settled outside of the card association network; and override processing of the transaction outside of the card association network at least partially based on the second rule.
 15. The system for processing the transaction of claim 12, wherein the rule defines transaction processing between a plurality of origination entities and the destination entity, wherein the plurality of origination entities comprises the origination entity.
 16. The system for processing the transaction of claim 12, wherein the origination entity processes purchase transactions, including the transaction, on behalf of a merchant.
 17. A computer program product residing on a non-transitory processor-readable medium for processing a transaction, the computer program product comprising processor-readable instructions configured to cause a processor to: cause a rule that defines transaction processing between an origination entity and a destination entity to be stored, wherein: the rule permits transaction settlement outside of a card association network, and the card association network is used to settle financial transactions; receive transaction information corresponding to the transaction; wherein: the transaction is between the origination entity and the destination entity; the transaction comprises a financial transaction involving a financial account linked with an account identifier; and the transaction information comprises the account identifier, which is associated with the destination entity; use the transaction information to identify the destination entity; access the rule that defines transaction processing between the origination entity and the destination entity; and process the transaction using the rule, such that the card association network is not used for settlement of the transaction.
 18. The computer program product for processing the transaction of claim 17, wherein the processor-readable instructions, which when executed by the processor, cause the processor to cause the rule that defines transaction processing between the origination entity and the destination entity to be stored comprises storing a plurality of rules, wherein the plurality of rules defines transaction processing between a plurality of origination entities and a plurality of destination entities.
 19. The computer program product for processing the transaction of claim 17, the computer program product further comprising processor-readable instructions configured to cause the processor to: access a second rule that identifies types of transactions that are permitted to be settled outside of the card association network; and override processing of the transaction outside of the card association network at least partially based on the second rule.
 20. The computer program product for processing the transaction of claim 17, wherein the rule defines transaction processing between a plurality of origination entities and the destination entity, wherein the plurality of origination entities comprises the origination entity.
 21. The computer program product for processing the transaction of claim 17, wherein the origination entity processes purchase transactions, including the transaction, on behalf of a merchant. 